Failure to adequately protect against abuse, misuse or other infringements of your company's trademark brings a host of negative consequences, of which a damaged bottom line is only the most obvious one. Companies that fail to do their search homework can trigger costly, unnecessary litigation and damage their public image. Allowing rivals to continue misusing trademarks over a prolonged period can also dilute the value of a product or service to the point of worthlessness.

Brand Dilution

In the long run, overlooking unauthorized use of a trademark can dilute a brand and render it worthless. A company's reputation can be damaged by rivals misusing its trademark to sell inferior products, for example, according to Andrea Evans, an intellectual property attorney interviewed for "Inc." magazine's June 2011 report. If the trademark misuse involves a larger company, allowing it to continue can lead consumers to think that the smaller competitor is the offender. For this reason, many businesses hire watch services to continually monitor all uses of their trademarks.

Customer Confusion

Customer confusion is a common assertion in trademark suits, such as one that pitted Apple Computer against Apple Corps Ltd., the Beatles' business entity. Apple Corps launched its lawsuit in 1978, alleging infringement against the band's name and logo, according to "The Wall Street Journal." Both sides settled in 1981, with Apple paying $29 million to the band and agreeing not to compete in the music business. Both sides settled again in 2007, after a court ruled that Apple Computer's logo for its iTunes online service did not promote any specific music, but served as an icon for the store itself.

Expensive Litigation

Defending trademarks is time-consuming and costly, which explains why just 1.5 percent of such cases go to trial, the U.S. Patent and Trademark Office (USPTO) stated in an April 2011 report to Congress. For companies suing in federal court, costs can range from $450,000 to $750,000, according to intellectual property lawyer W. Mack Webner. Other legal steps, such as hiring a survey expert, can add $30,000 to $50,000 to the bill. Losing a suit can trigger up to $2 million in statutory damages, attorneys' fees and destruction of any infringing items.

Trademark Bullying

Public perceptions can also be damaged by companies that act too aggressively to protect their trademarks, a practice commonly labeled as "trademark bullying," according to "Inc." magazine's report. Failing to do a complete and thorough search for a particular trademark's owners can result in companies learning that they are not the mark's senior user. The end result is a countersuit, or other types of legal action, brought by the offended company. Public confidence can also be damaged by sending a cease-and-desist letter that turns out to be unnecessary.

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